Put These FSA Changes On Your Health-Care Radar in 2011

By Katherine Hobson

If you’re like us, you never accurately predict your annual flexible-spending account needs, which means that you spend part of New Year’s Eve running around the drugstore grabbing up OTC meds like a “smurfer” in CVS, circa 2008.

This is the last year you’ll be able to do your own end-of-year, willy-nilly version of Drugstore Sweep, however. Per the health-care overhaul law, starting in 2011 you generally won’t be able to dip into your FSA to pay for OTC drugs unless they’re prescribed by a physician. (Insulin is a notable exception.) As Forbes reports, your FSA debit card won’t work against these purchases; you’ll have to pay up front and then put in for reimbursement.

(According to an analysis of clients that use Aon Hewitt’s Spending Account Administration Services, less than 8 percent of all FSA claims in 2009 were for OTC drugs.)

Many non-drug products — equipment, diagnostic tests, contraceptives and hearing-aid batteries, to name a few — are still eligible for FSA coverage without a doctor’s prescription. Here’s a handy list of what is and isn’t eligible. And here’s a Q&A from the IRS on this issue.

Comments (5 of 6)

I agree with stargirl65 - I do not see any logical reason for this change, besides some limited effect on fraud and an increase in paperwork for doctor's offices, pharmacists and the FSA people. The easy access to funds as we need them with the debit card was one of the big things we liked about FSA over the last year (our first using one). We didn't have to worry if we had the "extra" money in the budget this week or month to buy cold medicine or extra bandages for the random health issue that cropped up - we had the money and could access it with the FSA debit card. Now we still have to have the $$ in our own checking account AND in the FSA?!?! Whatever... we'll see how this year pans out with the changes.... I hope enough people are dissatisfied with the change and make enough buzz to get it changed BACK. Frankly, I'm surprised that the percentage for OTC is so low, but it may be because of the confusion over what is eligible and that eligiblity seems to change according to different plans, too.

8:00 pm October 29, 2010

Brian wrote :

Ha:

"If you’re like us, you never accurately predict your annual flexible-spending account needs, which means that you spend part of New Year’s Eve running around the drugstore grabbing up OTC meds like a “smurfer” in CVS, circa 2008."

I guess I'm not like you... I didn't even know that you could do that, and even if I did, I've never been so far off that I felt it would be worth my time to spend all the remaining funds on bottles of aspirin.

3:16 pm October 20, 2010

I don't even like tea... wrote :

Why only reduce the top rate? How about the people who scrape to get by day by day? Tax cuts would make a much bigger difference in these folks' lives.

6:11 pm October 19, 2010

Tea Party Activist wrote :

FSAs drive up the cost of health care by providiing a government subsidy for some health care expenses. FSAs should be eliminated and the extra tax money collected used to reduce the top income tax rate.

7:55 pm October 18, 2010

Dr. Rand wrote :

One more thing in the bill that raises costs and makes it harder to get medical treatment.